This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market.
According to the table shown,what is the firm's total revenue when 4 units are produced?

Question

This table shows the total costs for various levels of output for a firm operating in a perfectly competitive market. 
According to the table shown,what is the firm's total revenue when 4 units are produced?

Quizplus · Accepted Answer

To determine the best choice, we need to calculate the firm's total revenue and total cost for each level of output. 
When 4 units are produced, the price per unit is $40 (given that the market price is $40). Thus, the total revenue is: 
Total Revenue = Price x Quantity = $40 x 4 = $160 
The total cost for producing 4 units is $120 (by looking at the "Total Cost" column in the table). 
Therefore, the profit at 4 units of output is: 
Profit = Total Revenue - Total Cost = $160 - $120 = $40 
To find the level of output that maximizes profit, we can compare the profits at each level of output. At 4 units of output, the profit is $40, which is the highest profit among all other levels of output. Therefore, the best choice for the firm is to produce 4 units.

This Table Shows the Total Costs for Various Levels of Output